A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

June 08, 2013

We predicted it years ago. Inflation, then deflation, then inflation. And we've just made the turn.If you haven't already, GET OUT OF CASH and get into income-producing assets. Houses, apartment complexes, farmland, RV parks, factories, high-yield growth stocks, you name it. Why? Because EVERYTHING will be going up in dollar price, while inflation takes off, and the purchasing power of the dollar declines.Cash is trash. Welcome to the new bubble and financial mania. This one is gonna be a doozy. Sorry, not restarting the blog. Yet. Good luck out there. Remember, bubbles are fun - until they're not. And a blast-from-the-past reminder. Remember Denial, Fear, Desperation and Panic? Well, get ready for Excitement. And you know what happens after that.

38 comments:

Agree with the cash is trash part. Not so sure on how long this housing bubble will last. The rug could get pulled out any time as there are simply not enough jobs to justify the prices and the idiot kids coming out of school are saddled with huge amounts of debt. I will stick with PMs that I take delivery of and store at the bottom of a lake.

Also, The Retarded Negro needs to be impeached. It won't happen, but it should.

My wife and I put in an offer a month after your December 2010 post. I won't say it was *because* of your post, as we'd been looking for a few months. I was a real estate statistics junkie, and everything said it was time to buy in Seattle.

Your advice was absolutely correct. When we closed 6 weeks later, was almost the exact inflection point when the market suddenly bottomed out. Some got in on it, but by the time it was widely recognized, inventory was just GONE in Seattle.

Two years later we're looking at roughly 20% gains on the house and a ton of equity. We're in a good position no matter WHAT happens, even if our house drops 10% from its current position. If interest rates go up, we'll rent in a few years and turn a nice monthly profit.

All this because we were able to look at things objectively, and not let our pessimism (or greed) become our masters. Price/rent was good. Affordability in the localized area was good. It was time. All the while, the ZeroHedgers and tebaggers were rending their garments.

I'll be looking with great interest to see what happens on HousingPanic in the next year.

Keith - I appreciate all the posts you've written here and at Soot and Ashes, wished I'd found it earlier but I've learned a lot from you. So I'm not intending to be a Teabagger Doomer Troll when I say this post is confusing and I hope you might expand on it.

I accept that your list isn't meant to be complete but since we're still under the grip of the Supply Side Feudalism School of Economics, I just don't see the automaticness of inflation of many items you mentioned. Stocks would be the only likely candidate IMO. My reason is wages and living standards for the majority of Americans is declining and while we avoided the catastrophe of a Mittens admin there doesn't seem to a driver of wage growth for anyoneoutside of the 1%. But to the extent the Bubble 2.0 is here I would be inclined to say we're on the tail end of it.The housing one lasted maybe 5 years (2002-2007, with 2008 being when everyone outside of Wall Street noticed). We're at least 3 if not 4 years into this Bubble assuming the starting point is the Dow run up starting in 2009. Wingnuts (like Peter Schiff among many) haven't been right about much the last 4 years and they're on the same side of the trade as you (just sayin').

I agree with you. That is one reason I invest in gold. It has proven to be a wise investment. While its value can fluctuate, its worth goes up over time, even when there are difficult economic times and even when the dollar looses value. That is why I began buying gold from APMEX. They have a number of high quality gold bars, rounds and coins at fair prices and have proven themselves to be honest and reliable. Particularly in this financial climate, it is a good decision.

Just got linked to your blog from Patrick.net, which is ironic because (unlike you who called bottom and told us to buy) that blog is STILL filled with doomer idiots who spent all of 2009-2013 telling us we were NOWHERE NEAR THE BOTTOM.

Its hard to fathom how utterly and tragically wrong those doomers were. Every so often I read the comments on an old thread over there and just laugh and laugh and laugh.

Hedge funds were buying up a lot but seem to have stopped or drastically slowed down. 2 properties they purchased from me have been sitting there for 3 months while they wait to find renters with their overpriced rent. Meanwhile the 2 properties are starting to look like foreclosures again; tall weeds, dead landscaping. I believe this whole Hedge Fund REIT landlord deal is going to not work out so good.

I had a feeling this blog would be active again. Have been thinking a little recently about maybe buying a place, hadn't paid much attention the past couple years but I see the SF bay real estate market has again veered into silliness. Was looking at Zillow in an area I like today. Some piece of human excrement apparently bought a place there for 294k, 9 months ago, and is asking 575k for the place today. After browsing some news articles it looks like flippers are back and doing well the past year. Good old moral hazard. Thanks Bernanke, great policy making, you mentally retarded buttf@ck. I'm sure you've been paid as well as all the other "brilliant" captains of finance while driving this train deep into the turdpile.

Well looks like I'll be renting for a while longer. I can't believe how dumb some buyers are, if they actually want to outbid eachother to overpay by 100% for a modest house, let them have it, they'll get exactly what they deserve. Talk about a short memory, my god. I'm sure they're the same sort that have been foreclosed on the last few years.

Well hope to see some more posts here. My guess would be that this bubble 2.0 will move more quickly. There are clearly still a lot of dummies out there, but I have to believe that some fraction of the populace will now be more cognizant of the downside potential, so that this one won't have nearly the duration of the last one. I'm also hoping to see interest rates continue rising, I actually read an article recently that seemed to indicate that some people understand what that will do to the demand side of the housing market. Shocking to see people actually thinking ahead one step in advance...

Not sure about the cash is trash part. It's certainly been good to be invested the past year, but not sure how much longer that will be the case. I'm about 80% invested now with 20% on the sidelines. What do you think are the odds of another major pullback in the stock market within the next year? Next 3 years? I'm not sure at all, given that this entire "recovery" has been based on money printing and spurious govt statistics. If/when the market falls on its face again, cash will again be king.

How would there be a reflation when people, businesses, and governments are leveraged to the max? The leverage that caused the collapse in 2008 is again at the same level. Overall, debt was not written off in the system. A lot of it was just transferred from private balance sheets to the public balance sheet.

We have a debt-based currency and the only way you get inflation is if too much money (new debt) is chasing too few goods and services?

You better be telling us soon how you were wrong. K-winter is still kicking, K-spring won't be around for a while.

What we got was the second false K-spring, one Greenspan, one Bernanke. K-winter is about to kick in anytime now.

Cash was only king briefly, debt levels are at all time high.

Obama, who you so much defended, is the worst coward we've ever seen. I think you know that the crash will come when humans cannot control the situation any longer. For if they can control, for the sake of their legacy, they will. We are in the middle of the winter, I can almost see the light that the liar in the white house made you see in 2008. Sorry dude, your president stinks.

Stopped by on a lark, here in Charlotte (one of the last cities to join the downturn in 2008) the hedge funds have driven up rents. Not so bad for me, I kept the rentals I bought 2004-2007 time frame, have long term tenants in them who like the houses. I'm a renter too, moved into a small apartment and am content to have no yard to handle anymore. They can have the houses -- I'll keep the arbitrage, thanks.

Keith,I think of all the times you warned of the impending collapse of the housing bubble, and ended with "it hath been foretold". Everything in the market now reminds me of the last bubble, so much that I'm afraid that the 2.0 version of "Suzanne researched this" will show up on the TV somewhere between the Cialis and Lyrica commercials. I miss your posts.

2016 now and housing just keeps going out. Prices have been seeming 'out of whack' where I live in the Washington, DC area for over a year now... wondering when the correction will come. Interesting article.

Well, here it is 3 years later, and I thought I'd look for this blog. Hope the author is still alive and well... somewhere.

The fed has started tightening, albeit VERY slowly. IMHO, that is the watershed moment. I've been around a while, and I remember markets usually ignore the first few tightenings. But then they go "boom". Stocks have gone nowhere the past year, but housing is in "look how smart I am" mode. The coastal cities are in euphoria, while fly over is just happy. Several countries are teetering on the edge. There is talk that China and Brazil (summer olympics) are about to blow.

I think the US reflation has about a year of life left in it. A few more fed tightenings, and then another bear market.